NEWS RELEASE – FOR IMMEDIATE RELEASE
Media Contact: Nicole Vasile
Director of Communications
Survey Contact: Zachary West
Market Intelligence & Insights Associate
SIGNS OF PRICE MODERATION CONTINUED IN Q2 2022, THOUGH INFLATION POSED PROBLEMS, ACCORDING TO THE COUNCIL’S MARKET SURVEY
WASHINGTON, D.C. – The rapid increase in premiums seen in late 2020 and early 2021 continued to ease off in Q2 2022, with respondents reporting an average increase in premiums across all account sizes of 7.1%. Nevertheless, this still marked the 19th consecutive quarter of rising premiums.
When considering lines of business, we see a similar picture. Signs of pricing moderation emerged for some lines of business, like flood, medical malpractice, and surety bonds, while others, like cyber and umbrella, continued to experience upward pressure on premiums, though not as pronounced as in past quarters. Workers compensation premiums also continued to decrease in Q2 2022, at an average of -1.2%, making workers comp the only line with a decrease.
Commercial property and commercial auto were the lines most affected by recent inflationary trends, according to respondents. Property values, building material costs, and the cost of auto parts, among other things, were all impacted by inflation, in turn driving up premiums for commercial property and commercial auto as carriers had to adjust for the increased costs. Inflation also pushed up claims costs due to higher loss costs and administrative costs for filing claims. These factors exerted upward pressure on pricing—for commercial auto and commercial property especially. Despite the challenges in certain lines, some respondents emphasized that the difficult economy was an opportunity for brokers to demonstrate their value as a trusted advisor. “This market has caused many policies to have several limitations and exclusions that allow the commercial broker to prove their value” through “detailed analysis of all insurance options,” said one respondent from a midsize Northeastern firm.
While cyber premium pricing has seen some relief, with an increase of 26.8% in Q2 2022 compared to 27.5% in Q1 and 34.3% in Q4 2021, the line remained a struggle for brokers. Issues seen in Q1 continued in Q2, with respondents mentioning tightening limits, capacity issues, and higher deductibles. Respondents also said that though underwriters were a little more lenient when it came to some other lines, they were “still requiring extensive risk management controls” for cyber insurance and asking “lots of additional underwriting questions.”
When asked about opportunities for brokers in the future, 81% of brokers named “recruiting and developing talent” as the top priority. Another large focus for respondents was making use of technology and helping clients navigate the tough economy. According to respondents, there was a need to use “emerging new technology platforms to improve efficiency and provide better data analytics,” and to “bring easier data gathering techniques to clients to make their renewal process more streamlined.”